1. You have just joined a US based investment bank in their Shanghai office and you were asked to provide a starting point to perform projection for valuation of a company called Noodles Etc Limited ("Noodles") based in Shenzhen. After reviewing Noodles' financial statements from last few years, you have found that the leverage level of Noodles is high compared to its peer. You have also discovered that most of its indebtedness are based on US dollars and 40% of these indebtedness are coming due within the next two years. The sales growth of Noodles is below that of the industry level and of its close competitors. Noodles had tried various strategies over last several years but have not been able to turn the company around. There are also rumors that both the CEO and CFO might be retiring very soon. You were asked to specifically look for potential adjustments needed on Noodles' financial statements based on the above information and provide the following: (a) DESCRIBE and EXPLAIN TWO common incentives for management to use the flexibility within IFRS or GAAP framework in Noodles' case. (10 marks) (b) There are several common ways for management to achieve their incentives described in (a) above in the financial recording and reporting process. DESCRIBE and EXPLAIN TWO of the ways management can affect the accounting recording and reporting process to achieve their incentives. (10 marks)